Israel Economic Activity December 2020

Israel: Composite State of the Economy Index growth slows in December

The Bank of Israel’s Composite State of the Economy Index grew 0.52% in month-on-month seasonally-adjusted terms in December, which was a deterioration from November’s 0.65% increase.

On an annual basis, economic activity rose at a faster rate of 0.4% in December (November: +0.2% yoy), the best result since March. That said, the index is calculated using the latest available data and hence uses a combination of figures from recent months to provide a comprehensive picture of the economy’s performance. As such, December’s reading does not fully reflect the impact of the third national lockdown imposed late in the month.

Regarding the outlook, Padmasai Varanasi, an economist at Oxford Economics, commented:

“A reduction in the transmission rate alongside a successful vaccination of over 70% of the population by the end of Q1 2020 would allow a gradual easing of restrictions and resumption in economic activity. The recovery should then accelerate as households with high savings put their disposable income to use. However, activity will still be much lower than pre-pandemic levels as a high unemployment rate and widespread business closures owing to lockdowns have adversely affected household and business finances.”

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